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Endogenous TFP and Cross-Country Income Differences

  • Marla Ripoll
  • Juan Carlos Cordoba

Using a class of endogenous growth models that exhibit international spillovers, we show that most of the cross-country differences in output per worker are explained by barriers to the accumulation of rival factors (physical and human capital) rather than by barriers to the accumulation of knowledge. This is shown theoretically, by comparing models with exogenous and endogenous TFP, and quantitatively by using a carefully calibrated version of the model. The main finding is that barriers to the accumulation of physical and human capital explain up to 64% of income gaps relative to the US.

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Paper provided by University of Pittsburgh, Department of Economics in its series Working Papers with number 247.

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Date of creation: Jan 2005
Date of revision: Jan 2005
Handle: RePEc:pit:wpaper:247
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